Simple Investment Tips for Students
Before you know it Summer will be over – it always seems to fly by -- and that means it’s time to think about heading back to school, buying expensive text books and supplies from campus stores, setting up dorms, purchasing food and “socializing.” While a great number of college kids are more concerned about their social lives than studying, others are trying to find flexible part-time jobs with a 15-credit course load, as well as time for extracurricular activities.
All while paying for school on a shoestring budget.
However, there are always students who are doing their best to save, invest, and come up with the next big moneymaking idea, much like a 19-year-old Mark Zuckerberg did in his sophomore year at Harvard in 2004.
That 19-year-old is now worth more than $35.7 billion thanks to his brain child Facebook.com.
For those looking to get a financial jumpstart in college, I offer you this advice – work hard, have fun in life, and keep working hard.
Read as much as you can
Reading investment books is a great way to help you gain the knowledge necessary to become a successful investor and entrepreneur. When I’m not involved in a commercial real estate deal, conversing with a client, or writing, I like to kick back and read books. Some of my favorites include, Money Master the Game, The Millionaire Next Door and How Rich People Think.
Try finding books and articles that will give you even more advice on saving, investing, retiring and how compound $3,000 into millions. The most important thing for students to remember is that none of us were born a financial expert. Life experiences, and plenty of reading has helped me achieve my goals.
Start as early as you Can
Younger investors have a tremendous advantage when it comes to building up a portfolio – time. By investing just modestly in things other than college parties you can turn a $1,000 into tens of thousands of dollars with simple compounding. A simple one-time investment of $365 (with no additions) and a 5% annual yield would become $1,577 in 30 years. If you added another $365 annually with a 5% annual yield, you’d have $27,040 in 30 years.
You don’t have to start ‘big’ either. When it comes to investing money for your future, it’s not necessary to have a great deal of money. You never want to neglect bills for example to have more investing dollars. If you manage your money well, you should be able to set aside money from each paycheck for investing only.
Also be sure to diversify.
You’ve no doubt heard the rule, “Don’t pull all your eggs in one basket.” That’s sound advice for most things in life. If you only have $2,000 and use it to buy a few shares on a hot tip, you may as well go to a casino and bet it all on black. Instead, spread that money around evenly by opening a savings account, a position in an ETF or a mutual fund.
Avoid the Pitfall Excuses
Believe it or not, here are some of the top excuses from college kids I hear when it comes to investing.
- Investing is for rich people
- I don’t have enough money to make it work for me
- I don’t have time
- I’m confused by the options
- I’m afraid to lose money
Many rich people started out with nothing, as well. By doing the research, speaking with professionals, and starting at a young enough age, we were able to create wealth over time. As noted above, even if you have $1 to invest each day for the next 30 years, you could turn a small $365 investment into $27,040. We can all find the time and take the effort to make that money.
Of course, all investments carry risk. It’s important that you don’t jump into a stock, bond, mutual fund, ETF or real estate transaction without full understanding that you could lose money.
Most of all enjoy college. Have fun. But play it safe, too, especially if you want to become a financial success along the way. Make a financial plan. Create a budget and start saving and investing as soon as you can. Trust me, it’ll pay off.